Brand Management

A.A. 2022/2023

Virginia Vannucci
School of Economics and Management
Let’s play!
From the previous lesson…

• A brand extension occurs when a firm uses an established brand name to

introduce a new product
• Extensions can be either introduced in a product category currently served
by the parent brand (i.e., line extension), or a completely different product
category (i.e., category extension).
• The basic assumptions behind brand extensions are 1) consumers have
some awareness of and positive associations about the parent brand in
memory and 2) the brand extension will evoke some of these.
From the previous lesson…

• The extension’s ability to establish its own equity will depend on the
salience of consumers’ associations with the parent brand in the extension
context and the favorability and uniqueness of any associations they infer.
• Marketers need to carefully consider brand extension strategies by 1)
defining actual and desired consumer knowledge about the brand; 2)
identify possible extension candidates; 3) evaluate the potential of
extension candidates; 4) design marketing programs to launch extensions;
5) evaluate extension success and effects on parent brand equity.
Sixth lesson – learning objectives

1. Define the key components of brand

architecture how to organize and map the brand extensions

2. Define a brand-product matrix

3. Outline the principles of a good brand

portfolio

4. Assemble a basic brand hierarchy for a brand

5. Describe how a corporate brand is different

from a product brand

6. Explain the role of brand architecture in

strengthening a brand’s value and a firm’s
performance
Preview

The successful launch of new products and services is of

paramount importance to firms’
long-term financial prosperity

Firms must maximize brand equity across all the different brands
and products and services they offer

its like a graph

The brand architecture strategy determines which brand

elements they apply to their new and existing products and
services. It is the means that help consumers understand those
products and services and organize them in their minds
they map all of the brad they posses to seek new opportunities for brand extntions or to develop new one.
 Developing a Brand Architecture Strategy

what they already have in the market nd what they might implement => first thing to do

• The firm’s brand architecture strategy helps marketers determine:

Ø Which products and services to introduce
Ø Which brand names, logos, symbols, and so forth to apply to new and
existing products.

• The role of brand architecture is twofold:

Ø To clarify brand awareness: Improve consumer understanding and
communicate similarity and differences between individual products
and services.
Ø To improve brand image: Maximize transfer of equity between the brand
and individual products and services to improve trial and repeat
purchase.
Developing a Brand Architecture Strategy

what we have done in the past, what we are now and what is our potential (everything that you can reach in the future).

STEP 1: Defining brand potential in terms of a market footprint

STEP 2: Identifying brand extension opportunities or selecting the

product and service extensions that will allow the brand to
achieve that potential

how to brand

STEP 3: Branding new products and services including deciding

on the branding elements and positioning
The Brand-Product Matrix

• To characterize the brand architecture strategy of a firm, one useful tool is the
brand–product matrix, a graphical representation of all the brands and
products sold by the firm.
• The matrix (or grid) has the firm’s brands as rows and the corresponding
products as columns. brand line

• The rows of the matrix represent brand–product relationships. They capture

the firm’s brand-extension strategy in terms of the number and nature of
products sold under its different brands. A brand line consists of all products
sold under a particular brand. Thus, a brand line is one row of the matrix.
• The columns of the matrix represent product–brand relationships. They
capture the brand portfolio strategy in terms of the number and nature of
brands to be marketed in each category. The brand portfolio is the set of all
brands and brand lines that a particular firm offers for sale to buyers in a
particular category. Thus, a brand portfolio is one column of the matrix.
• We can characterize a firm’s brand architecture strategy according to its
breadth (in terms of brand–product relationships and brand extension
strategy) and its depth (in terms of product–brand relationships and the brand
portfolio or mix).
The Brand-Product Matrix

if you have different variation of the same

product you consider it as the same: for example
big mac in india is different form the one in italy
but you put it as the same
Brand-product Matrix - Example

Shampoo Face cream

• All soft
• Blond idol
• …

• Pure active cream

• Bio
• Skin Active
• …
Brand-product Matrix - Example

Shampoo Face cream

The Brand-Product Matrix
A product line is a group of products within a product category
that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed
through the same type of outlets, or fall within given price
ranges. A product line may include different brands, a single
family brand, or individual brand that has been line extended.

all the column that we have

A product mix (or product assortment) is the set of all product

lines and items that a particular seller makes available to
buyers. Thus, product lines represent different sets of columns in
the brand–product matrix that make up the product mix.

all of the rows that we have

A brand mix (or brand assortment) is the set of all brand lines
that a particular seller makes available to buyers.
Step 1: Defining Brand Potential

• The first step in developing an architecture strategy is to define the brand

potential by considering three important characteristics:

Ø Brand vision: it is the management’s view of the brand’s long-term

potential. It is influenced by how well the firm is able to recognize the
current and possible future brand equity. Brand vision needs to be
aspirational, so the brand has room to grow and improve in the future.
once the brand vision is done you can start to define brand boundaries
Ø Brand boundaries: defining brand boundaries means—based on the
brand vision and positioning—identifying the products or services the
brand should offer, the benefits it should supply, and the needs it should
satisfy. where i want to be. whiuch segment of
customers i want to serve
Ø Brand positioning: the four key ingredients are: (1) competitive frame of
reference, (2) points-of-difference, (3) points-of-parity, and (4) brand
mantra.
 Step 2: Identifying Brand Extension Opportunities

• Determining the brand vision, boundaries, and positioning in Step 1 helps

define the brand potential and provides a clear sense of direction for the
brand.

• Step 2 is to identify new products and services to achieve that potential

through a well-designed and implemented brand extension strategy.

• Brand extension is a new product introduced under an existing brand name

Ø Line extension: New product introductions within existing categories
Ø Category extension: New product introductions outside existing
categories
when we want to improve the brand meaning and brand positioning.

• The implications of each extension needs to be understood in terms of:

Ø Points-of-parity
Ø Points-of-difference
it can increase the overall brand awareness of the parent brand
Step 3: Specifying Brand Elements for Branding New
Products and Services
• New products and services must be
branded in a way to maximize the brand’s
overall clarity
Ø Branded house strategy
§ Umbrella corporate or family brand
for all its products
Ø House of brands strategy
§ Collection of individual brands all
with different names

• Sub-brands
Ø Brand extension in which the new
product carries both the parent
brand name and a new name
BRAND ARCHITECTURE

INDIVIDUAL PRODUCT BRAND

Product pay-off

Product A

Product A positioning
BRAND ARCHITECTURE

HOUSE OF BRANDS

COMPANY XYZ

Product A pay-off Product B pay-off Product C pay-off

Product A Product B Product C

Product A positioning Product B positioning Product C positioning

BRAND ARCHITECTURE
Virgin is a branded house

BRANDED HOUSE

(or “umbrella” brand)

Common pay-off

Product A Product B .... Product Z

Common positioning
BRAND ARCHITECTURE mulino bianco is endorsed

its a particular case of a branded house

ENDORSED BRAND
it’s called endorsed brand
because for different categories
we still have the name of the
company
Common pay-off

Specific Specific Specific

pay-off pay-off .... pay-off
product A product B product Z

Product A Positioning Product B Positioning Product Z Positioning

LET’S CHECK WITH SOME EXAMPLES
Which brand architecture do the following examples pertain to?
endorsed house of brand

different positioning

branded house

branded house

common positioning
Summary

• The three steps provide a careful and well-grounded approach to developing

a brand architecture strategy.

• To successfully execute this process, marketers should use brand portfolio

analysis for determining brand potential (Step 1), and brand hierarchy
analysis for defining brand boundaries and identifying brand elements for
branding particular products and services (Steps 2 and 3).
Brand Portfolios

• A brand portfolio includes all brands sold by a company in a product

category.

• Brand portfolio judged by its ability to maximize brand equity:

Ø Any one brand in the portfolio should not harm or decrease the equity of
the others.
Ø Ideally, each brand maximizes equity in combination with all other
brands in the portfolio. it should not lower the equity of the other brands

• The basic principle in designing a brand portfolio is to maximize market

coverage so that no potential customers are being ignored, but minimize
brand overlap so that brands aren’t competing among themselves to gain
the same customer’s approval. Each brand should have a distinct target
market and positioning.
Possible Special Roles of Brands in the Brand Portfolio

1. To attract a particular market segment not currently being covered by other

brands of the firm
2. To serve as a flanker and protect flagship brands
3. To serve as a cash cow and be milked for profits
4. To serve as a low-end entry-level product to attract new customers to the
brand franchise
5. To serve as a high-end prestige product to add prestige and credibility to the
entire brand portfolio
6. To increase shelf presence and retailer dependence in the store
7. To attract consumers seeking variety who may otherwise have switched to
another brand
8. To increase internal competition within the firm
9. To yield economies of scale in advertising, sales, merchandising, and
physical distribution
Brand Portfolios

FLANKERS

CASH COWS

LOW-END, ENTRY-LEVEL, OR HIGH END, PRESTIGE

BRANDS
Flankers
jetstar was born to protect quantas from virgin blue, becasue its a cheaper solution.

• Protective or “fighter” brands

Ø To create stronger points-of-parity with competitors’ brands
Ø To better compete with store brands and private labels and to protect
their higher-priced brand companions
they are also profitable for the company, even if they are born not for profit but to protect the main brand.

• Fighter brands must not be so attractive that they take sales away from
higher-priced comparison brands
Ø If connected to other brands in the portfolio, must not be designed so
cheaply that they reflect poorly on other brands

was born to create point of parity with virgin blue to protect the main brand: qantas
Cash Cows

• Some brands may be kept around despite dwindling sales because they still
manage to hold on to a sufficient number of customers and maintain their
profitability with virtually no marketing support.

• For example, even while technological advances have moved much of the
sales to streaming, Netflix still offers a DVD service to around 4.3 million diehard
fans who prefer to receive a DVD via mail and watch these via DVD players.
Netflix does not spend any money in promoting the DVD service. Thus, the
DVD business acts as a cash cow with an operating profit of 50 percent. Given
the loyalty of DVD subscribers to the format, withdrawing the DVD service
does not make economic sense as it may not necessarily switch customers to
another type of product, for example, streaming. Therefore, as is typical of a
cash cow strategy, Netflix profits more by retaining the traditional DVD
business than withdrawing from the business.

they do not invest in this, and they don’t disinvest in it becasue it’s still profitable.
Low-End, Entry-Level, or High-End, Prestige Brands
attrack customers that prefere low price brand

• Many brands introduce line extensions or brand variants in a certain product

category that vary in price and quality.
• These sub-brands leverage associations from other brands while distinguishing
themselves on price and quality.
• The role of a relatively low-priced brand in the brand portfolio often may be to
attract customers to the brand franchise.
• The role of a relatively high-priced brand in the brand family is often to add
prestige and credibility to the entire portfolio.

• In all brand portfolio decisions, the basic criteria are simple: to minimize
overlap and get the most from the portfolio, each brand-name product must
have:
Ø A well-defined role to fulfill for the firm
Ø A well-defined positioning indicating the benefits or promises it offers
consumers.
Brand Hierarchies

• A brand hierarchy is a useful means of graphically portraying a firm’s branding

strategy by displaying the number and nature of common and distinctive
brand elements across the firm’s products, revealing their explicit ordering.
• It is based on the realization that we can brand a product in different ways
depending on how many new and existing brand elements we use and how
we combine them for any one product.
Brand Hierarchies – Apple Brand Hierarchy

shows the different brand element adopted by the brand to differentiate the models
Brand Hierarchies

• There are different ways to define brand elements and levels of the hierarchy.
Perhaps the simplest representation from top to bottom might be:
Ø Corporate or company brand (General Motors)
Ø Family brand (Buick) in the previous example: iphone

Ø Individual brand (Regal) model 7

Ø Modifier (designating item or model) (GS) a modifier is the red version for aids, or the different gigabits

Ø Product description (midsize luxury sport sedan automobile).

Levels of Brand Hierarchy

• Corporate or Company Brand Level

• Family Brand Level

• Individual Brand Level

• Modifier Level

• Product Descriptor
Corporate or Company Brand Level

• Highest level of hierarchy

• For legal reasons, the company or corporate brand is almost always present
somewhere on the product or package, although the name of a company
subsidiary may appear instead of the corporate name.

• Corporate image
Ø Consumer associations to the company or corporation making the
product or providing the service
Ø Relevant when the corporate or company brand plays a prominent role
in the branding strategy
Family Brand Level

• Used in more than one product category

Ø But is not necessarily the name of the company or corporation
Ø Also called a range brand or umbrella brand

• If the corporate brand is applied to a range of products, then it functions as a

family brand too

• If products linked to a family brand are not carefully considered, the

associations to the family brand may become weaker

it’s a family brand because its name is used in more than 1 product category
Individual Brand Level

• Restricted to essentially one product category

• The main advantage of creating individual brands is that we can customize

the brand and all its supporting marketing activity to meet the needs of a
specific customer group.

• Thus, the name, logo, and other brand elements, as well as product design,
marketing communication programs, and pricing and distribution strategies,
can all focus on a certain target market.

• Moreover, if the brand runs into difficulty or fails, the risk to other brands and
the company itself is minimal.

• The disadvantages of creating individual brands, however, are the difficulty,

complexity, and expense of developing separate marketing programs to
build sufficient levels of brand equity.
Modifier Level

• Regardless of whether marketers choose corporate, family, or individual

brands, they must often further distinguish brands according to the different
types of items or models.

• A modifier is a means to designate a specific item or model type or a

particular version or configuration of the product.

• Must further distinguish brands according to different types of items or models

• Thus, one function of modifiers is to show how one brand variation relates to
others in the same brand family. Modifiers help make products more
understandable and relevant to consumers or even to the trade.

• They can even become strong trademarks if they are able to develop a
unique association with the parent brand
Product Descriptor

• Although not considered a brand element per se, the product descriptor for
the branded product may be an important ingredient of branding strategy.

• The product descriptor helps consumers understand what the product is and
does and also helps define the relevant competition in consumers’ minds.

• In some cases, it may be hard to describe succinctly what the product is, a
new product with unusual functions or even an existing product that has
dramatically changed.

• In the case of a truly new product, introducing it with a familiar product name
may facilitate basic familiarity and comprehension
Levels of Brand Hierarchy
Designing a Brand Hierarchy

• Brand elements at each level of the hierarchy may contribute to brand equity
through their ability to create awareness as well as foster strong, favorable,
and unique brand associations and positive responses.

• The challenge in setting up a brand hierarchy is to decide:

Ø Specific products to be introduced for any one brand

Ø Number of levels of the hierarchy to use
Ø Desired brand awareness and image at each level
Ø Combinations of brand elements from different levels of the hierarchy
Ø Best way to link any one brand element to multiple products
Specific Products to Introduce
how to choose which product to introduce in the brand hierarchy

• The company should follow three principles:

Ø Principle of growth à firms must make cost–benefit calculations for

investing resources in selling more of a brand’s existing products to new
customers versus launching new products for the brand.

Ø Principle of survival à brand extensions must achieve brand equity in

their categories. In other words, “me too” extensions must be avoided.
if the new product introduction is not maximizing the brand equity and
focus on what i can achieve with the brand extension introduction
we are just doing it becasue our competitors are, its better to not do it.

Ø Principle of synergy à states that brand extensions should also enhance

the equity of the parent brand.
Number of Levels of the Brand Hierarchy

• Given product boundaries, the first decision to make in defining a branding

strategy is, broadly, which level or levels of the branding hierarchy to use.
• Most firms choose to use more than one level, for two reasons:
Ø Developing brands at lower levels of the hierarchy allows the firm
flexibility in communicating the uniqueness of its products.
Ø Developing brands at higher levels of the hierarchy is obviously an
economical means of communicating common or shared information
and providing synergy across the company’s operations, both internally
and externally.
• The practice of combining an existing brand with a new brand is called sub-
branding, because the subordinate brand is a means of modifying the
superordinate brand.
• At the same time, developing sub-brands also help customers better
understand how products vary and which particular product may be the right
one for them.
Number of Levels of the Brand Hierarchy

• Prada has successfully launched several distinct sub-brands, all of which offer
excellent design and high quality.

• Samsung has family brand names such as Galaxy to denote one set of
smartphone products and Gear to denote smartwatches and fitness trackers.
Desired Awareness and Image at Each Hierarchy Level

• Achieving the desired level of awareness and strength, favorability, and

uniqueness of brand associations may take some time and call for a
considerable change in consumer perceptions.
• Marketers should follow two general principles:
Ø The principle of relevance is based on the advantages of efficiency and
economy. Marketers should create associations that are relevant to as
many brands nested at the level below as possible, especially at the
corporate or family brand level. The greater the value of an association
in the firm’s marketing, the more efficient and economical it is to
consolidate this meaning into one brand linked to all these products.
in order to not make them competitors
Ø The principle of differentiation is based on the disadvantages of
redundancy. Marketers should distinguish brands at the same level as
much as possible to ensure consumers and retailers can clearly see the
distinctions; otherwise, brand variations can easily get out of control. A
key issue in designing a brand hierarchy is thus choosing which product
should be the core or flagship product.
Combining Brand Elements from Different Levels

how to put together the different brand elements

considering which one is more important. the
• Principle of Prominence Nike logo is bigger

Ø The prominence of a brand element is its relative visibility compared with

other brand elements.
Ø A name is generally more prominent when it appears first, is larger, and
looks more distinctive.
Ø The principle of prominence states that the relative prominence of the
brand elements determines which become the primary one(s) and
which the secondary one(s). Primary brand elements should convey the
main product positioning and points-of-difference. Secondary brand
elements convey a more restricted set of supporting associations such as
points-of-parity or perhaps an additional point-of-difference.
Ø According to the principle of prominence, the more prominent a brand
element, the more emphasis consumers will give it in forming their brand
opinions.
Branding Strategy Screen
• If a potential new product or service is strongly related to the parent brand
such that there is a high likelihood of parent brand equity carryover, and if
there is little equity risk, a product descriptor or parent-brand-first sub-brand
may make sense.
• If a potential new product or service is more removed from the parent brand
such that there is a lower likelihood of parent brand equity carryover, or if
there is higher equity risk, then a parent-brand-second sub-brand or even a
new brand may be more appropriate.
• These pros and cons help determine whether a BH or HOB is the more
appropriate strategy.
Linking Brand Elements to Multiple Products

link brand elements to multiple product to enforce the overall force of the brand

• The principle of commonality states that

the more common brand elements
products share, the stronger the linkages
between them.
• The simplest way to link products is to use
the brand element as is across them.
Adapting the brand, or some part of it,
offers additional possibilities for making the
connection.
• We can also create a relationship between
a brand and multiple products with
common symbols.
• Finally, it’s often a good idea to logically
order brands in a product line to
communicate how they are related and to
simplify consumer decision making.
Summary: Guidelines for Brand Hierarchy Decisions

1. Decide on which products are to be introduced.

– Principle of growth: Invest in market penetration or expansion
v s product development according to ROI opportunities.
er us

– Principle of survival: Brand extensions must achieve brand

equity in their categories.
– Principle of synergy: Brand extensions should enhance the
equity of the parent brand.
2. Decide on the number of levels.
– Principle of simplicity: Employ as few levels as possible.
– Principle of clarity: Logic and relationship of all brand elements
employed must be obvious and transparent.
Summary: Guidelines for Brand Hierarchy Decisions
To sum up…